By Alex Thiersch, JD, Founder and Director of the American Med Spa Association

An employment contract between a medical practice and a physician must benefit both the employer and employee; otherwise, it likely will be unsatisfactory for one or both sides. If one or both sides don’t take the time to read the contract, they could find themselves disappointed with the outcome. Here are a few things that physicians and practices should find within a mutually beneficial contract.

For more information on medical spa employment contracts, view AmSpa’s webinar on the topic (free to AmSpa Plus members.)

A Clearly Articulated Goal

Before a contract with a physician is finalized, the practice should consider what it wants to accomplish. Does it want to fill a need? Does it want to service more patients? Does it want to transition ownership to this individual? The answer to this can affect the way an employment agreement is designed and the type of person the practice wants to recruit (i.e., a younger doctor versus a more experienced one). If a practice hires a physician who has entrepreneurial aspirations to simply tend to patients, for example, neither side is likely to be particularly happy, and the relationship likely will not last very long.

The practice must clearly communicate its intentions during the recruitment process and make sure that the contract is built around that philosophy.

From the other perspective, a physician must honestly evaluate his or her goals when negotiating a contract. Physician contracts typically last for one to two years, but both sides typically expect that the relationship between the practice and the physician will continue thereafter, so a physician must consider his or her long-term plan. Is this where he or she wants to build a career? This can influence how the contract is negotiated.

The physician also needs to consider his or her “plan B”—if this arrangement does not work out, what’s next? The answer to this question heavily influences how he or she evaluates the contract. For example, if the physician wants to live in the city where the practice is located but the contract has a restrictive non-compete clause, that clause will need to be negotiated, as it severely restricts his or her options if it the relationship with the medical spa does not work out. Click here to read more on non-compete and non-solicitation clauses.

A Fair Wage

A medical spa should balance the economics of the practice, the risk tolerance of the owners, and the realities of the market in terms of salary when negotiating a contract. A competitive guaranteed base salary with some form of incentive-based bonus system can make a difference when it comes to obtaining top talent who might be considering other options. There are multiple ways this can be arranged depending on what suits the physician.

The prospective employee, on the other hand, must come to terms with his or her risk tolerance. While a high base/low bonus structure might appeal to some, others might want to bet on themselves with a low base/high bonus structure. It is up to the physician to determine his or her comfort level with the contract’s salary structure and negotiate if it is not optimal.

The physician also must be sensible when determining his or her actual earning power. If there is not enough potential business in the market to justify taking a low base/high bonus salary, the physician should negotiate a different deal.

Ownership Considerations

The practice must determine what it wants to accomplish in terms of ownership with the hire, since it will affect everything from scheduling and coordination to top-level decision-making. The owner(s) of the practice also must consider if this transaction constitutes part of their exit strategy; if so, the contract must be structured with that in mind.

The physician, meanwhile, must determine his or her goals in building the practice and figure out how the ancillary revenue streams offered by the practice compare to those offered by others. Ownership has different appearances for different entities, so the physician must think about what he or wants and what the practice can provide. What is the cost of the investment? What is the potential return? What is the risk? All these questions should be answered in the contract.

A contract is a complicated matter. Both sides must assess the value of the risks and rewards, and they must be willing to compromise on matters that may not be as important. A careful reading of a contract is absolutely imperative, however—if a physician or practice doesn’t thoroughly read the contract, they have nobody to blame for their unhappiness but themselves.

For more information on structuring your medical spa profitably and compliantly, attend an AmSpa Medical Spa & Aesthetic Boot Camp and be the next med spa success story.